Scott Power: ASX healthcare stocks slide … but spring and US rate cut bring hope

• ASX heath sector falls 1.09% over past five days, while broader markets down 0.66% for same period
• Study shows PolyNovo’s NovoSorb BTM accelerates healing of large post-surgical diabetes-related foot wounds 
• Stockhead to join with IR Department and Morgans for HealthInvest 2025 in Sydney on September 24

Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 27 years, gives his take on the ASX healthcare sector for the week and his ‘Powerplay’ stock pick.

The ASX healthcare sector is struggling to find relief after weeks of weakness following a rough reporting season but Morgans’ senior healthcare analyst Scott Power reckons it might finally be on the way, courtesy of a US rate cut.

In early afternoon on Friday the ASX Health Care Index (XHJ) had slipped 1.09% over the past five days, while the broader S&P/ASX 200 (XJO) was down 0.66% over the same period.

“As widely expected the US cut their interest rates by a quarter of a percent this week with falling interest rates positive for broader markets as we come into a seasonally stronger part of the year,” Power said.

Power said in a further promising sign of improving fundraising conditions for biotechs, EMVision Medical Devices (ASX:EMV) this week announced a $12 million-plus equity raising, with the funds earmarked to advance its two portable stroke detection tools.

Heart disease diagnosis play Artrya (ASX:AYA) has undertaken a $75 million two tranche placement, and launched a $5m share purchase plan.

The capital raise will accelerate US rollout of Salix, its approved AI-enabled tool for detecting coronary plaque.

PolyNovo posts positive trial results for NovoSorb BTM

Wound-care company PolyNovo (ASX:PNV) has announced positive results from a randomised controlled trial showing that its NovoSorb BTM significantly accelerated healing of large post-surgical diabetes-related foot wounds.

The randomised controlled trial compared patients with post-surgical diabetes-related foot wounds treated with NovoSorb BTM plus negative pressure wound therapy (NPWT) versus those receiving standard care, which is NPWT alone.

In wounds great than 10 cm2, healing time was reduced by more than four months compared to standard care.

“While overall healing and amputation rates showed no significant difference, the faster closure of large wounds positions NovoSorb BTM as a valuable treatment option,”Power said.

The findings will be presented at the ANZ Society of Vascular Surgery conference in October 2025 and may support broader US adoption pending CMS pricing changes in 2026.

“The study started in 2022 and to get to market would require a larger more targeted trial which we estimate would take a couple of years to complete and gain approval,” Power said.

“In our view the diabetic foot ulcer space remains a difficult indication to treat – it’s a small positive for PNV.”

Morgans has a speculative buy on PolyNovo with a 12-month target price of $1.69.

Avita gets EU approval for Recell Go

And good news for another wound-care company, Avita Medical (ASX:AVH), which has announced approval of Recell Go in the EU under the European Union Medical Device Regulation (EU MDR).

Following the approval, AVH intend to start commercialisation across Germany, Italy, and the UK. In a note to client Morgans’ healthcare analyst Iain Wilkie said while its always good to have more products approved for sale in large markets, Avita’s historically had very little success with Recell in EU to date, with US$155,000 of sales in FY24 (~0.2% of group sales).

“We also view the recent US$15m placement as insufficient to provide a comfortable runway through to the Q2 FY26 breakeven target (per AVH guidance),” Wilkie wrote.

“There’s no reason to expect any material change in fortunes at this stage, and the focus remains firmly on US sales and on cash burn/balance for now, potentially deterring some investors and increasing risk,” he wrote.

“The recent US$15m placement we viewed as insufficient to provide a comfortable runway to Q2 FY26 breakeven (AVH guidance).

“Happy to see the next few quarters to get more comfort here, as guidance as been increasingly wayward in achieving recent guidance forecasts.

“Regardless, we continue to view the opportunity ahead as significant with a strong product, and view in time that investor bravery may be rewarded once AVH demonstrate a clear line of sight to profitability.”

Morgans has a speculative buy on Avita with 12-month target price of $2.

Imricor wraps human factors study for FDA approval

Developer of the world’s only MRI-compatible devices for cardiac ablations, Imricor Medical Systems (ASX:IMR) has successfully completed a comprehensive human factors (HF) study for all devices under US Food and Drug Administration (FDA) review.

The seven-month study involved 46 healthcare professionals across nearly 20 US hospitals and covered nine products, far more than typical industry practice.

The HF study is considered a critical step in the FDA approval process, ensuring that each device can be used safely and effectively by clinicians in real-world settings.

Completion of the extensive study across Imricor’s full product portfolio represents a major milestone in advancing toward FDA market approval for atrial flutter, which is expected H2 CY26.

Power said there were plenty of other catalysts for Imricor coming up including US approval expected in Q4 CY25 for its NorthStar mapping system, additional procedures to be performed to gain approval in Europe for ventricular tachycardia, along with more commercial sales in Europe and the Middle East.

“Imricor is continuing to make positive steps in getting FDA approval for atrial flutter in the US, which will be a major milestone for the company,” Power said.

Morgans has a speculative buy rating on Imricor and 12-month target price of $2.22.

EBR achieves tenth US commercial implant milestone

EBR Systems (ASX:EBR) has passed the tenth commercial implant of the WiSE System, the world’s only leadless solution for pacing the left side of the heart, in the US

EBR said several of these procedures were carried out by Dr Rahul Doshi at HonorHealth, one of Arizona’s largest nonprofit healthcare systems, serving around five million people.

EBR achieved US FDA clearance for the WiSE System in April with a pilot launch strategy concentrating on fewer sites to achieve higher use rates.  Several other procedures have been undertaken since the milestone.

A limited market release is on track to kick off in October, coinciding with initiation of the New Technology Add-On Payment (NTAP) and Transitional Pass-Through (TPT) reimbursement schemes for WiSE.

EBR President and CEO John McCutcheon will be in Australia to present at next week’s HealthInvest in Sydney.

“This is positive news for EBR and bodes well for the limited market release in October,” Power said.

EBR has a speculative buy rating on EBR and 12-month target price of $2.86.

Power’s Powerplay: Morgans upgrades Sigma after strong FY25

Sigma Healthcare (ASX:SIG) is Power’s pick of the week, with Morgans upgrading its forecasts following a strong FY25 result.

“Sigma’s transformational agreement to merge with Chemist Warehouse created a leading healthcare wholesaler, distributor, and retail pharmacy franchisor,” Power said.

“Our upgrade was driven by higher synergy targets being announced to the markets, up from $60m to $100m by 2028 with the synergies mainly coming from supply chain, logistics and corporate costs.

“We’ve put through some margin improvements across our forecasts and if we look at the EBIT number for the next three years we’re forecasting average growth of greater than 23%.”

Morgans now has an accumulate rating on Sigma from a previous hold and 12-month target price of $3.39, up from $3.12.

Countdown to HealthInvest

Power said he was looking forward to the second HealthInvest 2025 event in Sydney next Wednesday, September 24, which is being hosted by Morgans in partnership with Stockhead and the IR Department.

The event will showcase emerging ASX-listed healthcare companies to potential investors. Along with EBR Systems (ASX:EBR), Clever Culture Systems (ASX:CC5), Neurizon Therapeutics (ASX:NUZ), Tetratherix (ASX:TTX) and CogState (ASX:CGS) will present at the event.

“We’ve got five exciting emerging healthcare names presenting, all of which have material catalysts coming over the next three to six months, “Power said.

HealthInvest 2025 will run from 4.45pm to 7pm with doors open 4.15pm at Morgans, Level 21, 88 Phillip Street, Sydney. Tickets are free and available via the event website.

At Stockhead, we tell it like it is. While EMVision, EBR Systems and Neurizon Therapeutics are Stockhead advertisers, the companies did not sponsor this article.

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